When do I need a Business Auto Insurance policy?

I was just talking with the owner of a local real estate agency this week and reviewing their insurance portfolio when he asked “So sometimes I let my employees drive my vehicle when they need a truck to haul things, is that ok to leave my truck on my personal auto policy?”

The answer is, a very firm, NO and illustrates one of the most common gaps that business owners leave in their insurance armor. I quickly advised my client that he needed to get that vehicle onto a Business Auto policy ASAP and not to let any employees drive until we do this. There are several different scenarios involving businesses and auto insurance when knowing what you need, or having an agent you trust is, invaluable!

Here are some quick facts to help clear up some common questions…

Personal Auto Insurance policies specifically exclude coverage when your vehicle is being driven by an employee.
In the scenario above, if an employee were to get into an accident in the owners vehicle, his insurance company could deny coverage. With no coverage from the insurance company, the owner’s assets would now be at risk in any ensuing injury lawsuits.

Personal Auto Policies exclude coverage when your vehicle is used “for hire” such as pizza delivery, ride-share, etc.
Some policies now have the ability to add that coverage on but you’d need to talk to your agent to check your options.  Some ride-share companies will tell their drivers that they are covered under a master policy. While  technically this may be true, there are some gaps you need to know. Best to call your agent  (or us) and learn more about your specific situation.

Business Auto Policies don’t automatically cover….
Your employee using their vehicle to do errands for the business.  Have someone who runs by the post office, bank or grocery store for “the office”  better make sure your business auto policy has proper coverage for that. If you ask an employee to do an errand in their own vehicle on behalf of the company, you’ll need to make  sure the proper coverage exists.  Going to rent a van and take your team out  to the ballgame?  Again, time to check your policy, rented vehicles are not always automatically covered.

Let’s break down a few scenarios to discover more about when you should have a Business Auto Policy as well as when you may not need one.

I definitely need a Business Auto policy when-

  • I have employees or subcontractors that drive your vehicle
  • The title of my vehicle is in my business name.
  • My business involves the pick-up and delivery of food, goods or people
  • My vehicle weighs more than 12,000 lbs.

I should consider a Business Auto policy when-

  • I have employees that occasionally drive their own vehicles for work- Just because your employees don’t drive your vehicle does not mean that you cannot be found liable if they get into an accident in their car while on the clock. There is a special coverage called Non-owned Auto that can be added to your Business Auto policy or your Business Owners policy to cover you in this scenario.
  • My vehicle is a billboard ad for my company- Even if you are the only person that drives your vehicle, if you have your logo and advertising on it, it is wise to have a Business Auto policy for the increase liability protection it provides.

I likely don’t need a Business Auto policy when-

  • I use my vehicle for work but I don’t fit any of the examples above. A good example would be a Realtor or Insurance Agent. We drive to show houses and visit clients but don’t allow others to drive our vehicles and generally don’t have logos on them. In these cases, most likely, you can simply classify your vehicle as business use on your Personal Auto policy.  Talk to your agent for additional information on your specific circumstance.

If you aren’t sure whether you need a Business Auto policy or not the best thing to do is to talk to a knowledgeable insurance agent. They can better address your specific scenario and help you understand your risks and options.  Additionally, participating in reviews with your agent will help reduce or even eliminate gaps in your protection.  We are happy to do policy and coverage reviews – Not a client of PNW? No problem, we are still happy to help and take a look!